When Does it Pay to Buy A Hybrid?

There's a lot to consider, in addition to costs.

The battery for the GMC Sierra hybrid pickup truck is stored under the rear seat.

As the economy tries to regain its footing, concrete producers may not be in position to add new vehicles to their fleets. But that is not stopping manufacturers from making advancements on the hybrid vehicle front.

Eventually, those vehicles currently in producers' fleets must be replaced. So, it's important to stay current and learn to evaluate hybrid technology, from tractor-trailers to ready-mix trucks, and from pickup trucks to SUVs.

Most engine builders are using selective catalytic reduction (SCR) to meet 2010 emission requirements. Navistar developed Advanced EGR (exhaust gas recirculation). Both strategies are based on 2007 technology, so the learning curve should not be too steep. Some fleet managers are evaluating operational differences, including fuel economy and maintenance intervals, for future purchases.

There's more to consider than just meeting 2010 standards. Adding hybrid vehicles to a fleet offers improved fuel economy and, for producers doing business with government agencies, the image of being a green supplier. This is also the final year of tax credits for putting new hybrid vehicles into service.

The Internal Revenue Service has identified more than 50 vehicles in all classes as being eligible for tax credits ranging from $3000 to $12,000 for Class 4 through Class 8 trucks.

If you add hybrids to your fleet, whether an SUV, a ready-mix truck, or anything in between, promote this with local news outlets. It will help build goodwill with your community and potential customers. It could also provide an advantage when bidding on government projects.

Of course, you also expect a significant positive payback. Depending on service profile, observed fuel economy improvements have ranged from 25% to 50%. Unlike ordinary cars, hybrid vehicles have better fuel economy in city traffic than on the highway. That's because stop-and-go city driving lets the system reclaim energy during braking. You can expect the same from trucks.

In evaluating hybrids, first understand your vehicles' service profiles. Which trucks operate close to plants, which travel on highways at steady speeds, and which operate within city limits? To properly compare trucks, dedicate them to one kind of service. Segment your fleet as much as is practical. With a segmented fleet, you can identify where to use hybrids to your best advantage.

Doing the math

Many operators consider only the return on fuel economy when evaluating hybrids. When looking at the example in the box on page 46, it isn't even worth considering, especially with a 10-year expected service life.

But consider other factors. The tax credit immediately reduces the cost differential to $28,000. Projected residual value after an estimated 10-year initial service life could increase by as much as $5000. Because hybrids recharge the battery pack during braking, reducing the load on service brakes, brake maintenance is greatly reduced. Oil change intervals, if based on oil analysis, can be extended. Maintenance savings from brakes and oil changes alone can save $1000 a year.

When calculating annual savings of $3400 in fuel, $1000 in maintenance, and $500 prorated residual value against the net cost differential of $28,000, payback becomes 5.7 years. This is well within the projected service life of the vehicle. Also, with less stress on mechanical components, you might extend service life by one or two years.

Also consider PTO time, provided your hybrid is equipped to operate the power take-off for sufficient time under your loads. For example, in some hydraulic operations, batteries can provide sufficient operating time to require five minutes or less of recharge time per hour.

Adding more battery capacity will add significantly to operating time in electric mode with a ready-mix truck. However, batteries will also add weight and cost to the vehicle. Savings in fuel by operating the truck electrically with the engine off may make up for the added cost.

To increase accuracy, calculate a discounted cash flow. With interest rates near zero, the differences should not be significant. But take higher future interest rates into account, along with any estimates of fuel price increases and maintenance costs.

You can work with your truck builder's representatives on specific technical issues when specifying a hybrid truck. One of the best resources to help your analysis is the not-for-profit Hybrid Truck Users' Forum at www.htuf.org, a support organization for commercial hybrid trucks.

Hybrid technology will be on display at The Work Truck Show. For a preview of the upcoming event, turn to page 43. Paul Abelson is a former director of the Technology and Maintenance Council of the American Trucking Association and is on the Board of Truck Writers of North America. To contact him, e-mail truckwriter@anet.com.